module - Dona Marie Divina

8/8/2019 module - Dona Marie Divina

1/23

Starting and Expanding a Small Business

Small Business, Entrepreneur and Franchises

What is this module all about?

A day filled with blessings! Its nice to see you again! I hope that you will find

this module very interesting. This module focuses on preparing students for all levels of the

business environment. The course is designed to develop the knowledge and skills necessary for

success in the business world, and to develop a competence in putting or starting up a business.

What are you expected to learn.

In this module, the students are expected to:

1.Describe the importance of Small Business Administration (SBA) inputting up a small business.

2. Analyze the different factors in order to organize or solve the business

problems.3. Apply all the good qualities of being a good entrepreneur.

4.Demonstrate knowledge of the process involve in making businessplan.

5. Apply good techniques in putting up or buying a Franchise.

How would you learn from this module?

In order for you to learn from this module all you need to succeed is a goodattitude, the willingness, in the discipline to get the job done.

Answer all the activities and self- check correctly. This will give you a good start

for preparing for your business skills. Hope you will enjoy it! Good luck!


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PRETEST

INSTRUCTIONS: Read and understand the questions carefully and choose the best

answer by writing the correct answer that best fit to the item on the space provided for.

____1. It is a good source of information about small business.

a. SBA c. NSA

b. NSF d. CIA

____2. It is the average interest rate paid on financing.

a. Short term financing c. Cost of capital

b. Long term financing d.Dept financing

____3. It is the risk takers that begin new businesses in private industry.

a. Intrapreneurs c. Businessman

b. Entrepreneurs d. Risk takers

____4. They are the one who create innovation within a bigger organization.

a. Entrepreneurs c. Businessman

b. Risk takers d.Intrapreneurs

____5. It is a business arrangement in which a small business buys the rights to sell

goods or services of the supplier.

a. defense, modified c. factual

b. develop, devote d. failure, feature

____6. It is also called small business or it is the other term for the small business

a. Franchisee c. Franchisor

b. Franchise d. Fast food chain

____7. It is also called supplier in the franchising world.

a. Franchisee c. Franchisor b. Franchise d. Fast food chain


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____8. These are organizations that help small business through the early stages of

development.

a. Incubators c .Internet

b. Score d. Newsgroups

____9. It is the Service Corps of Retailed Executives that is a resource partner of the

SBA


b. Score d. Newsgroup

____10. It contains a large amount of data for research and the opportunity to market

services globally in real time.




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Independently

owned and

o erated

Not dominant in

field

Relatively

small in

terms ofTypically

employing fewer

than 5oo workers

Small businesses:

y Create 67-75% of new jobs.y Generate more than half of the

private U.S GDP.y Supply the needs of big

businesses.

y Provide specialized goods andservices.

SMALL BUSINESS


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Characteristics Lifestyle business High growth ventureManaged and run by: One or two people Team

Percent of a small business 80 90% 10 20%

Growth potential Limited High

Typical expansion Slow Rapid

Cash Flow Low Medium to High

Investors Few Several to many

y New Small business owners are surprised by howmuch time is required to maintain their business.

yThose who come from big business environmentare particularly challenged by the amount of work

that is required.

y Other surprised often include the amount ofmoney required and the amount of time required.

y The number of small business increase when theeconomy weakens, but when the economy was

strong in the 1990s small business increased.

y The main factors that contributed to the rise insmall businesses were technology including the

internet, rise in the number of women andminority business owners, downsizing, and

outsourcing.

y The increasing availability and decreasing cost oftechnology allowed small business owners to

create professional documents and websites

accessible to a global customer base.

y From 1987 to 1997 the number of new minoritybusiness increased 168%.

There are two categories of small businesses:

Lifestyle business and High growth ventures

The table below contrasts the two types.


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The number of women - owned

business also increased tremendously

from 5% to 39% of all small business.The main reason women start small

business is that they have anentrepreneurial idea.

Less important reasons listed in

ascending are: the glass ceiling effect,

boredom in current job, and downsizing.

If someone is a talented person now he/

or she can have a great opportunity to begin

businesses of their own and many take that

opportunity.

Another way for companies to reducerecurrent costs is to subcontract, or out course,

specific function and/ or projects.

When they look for companies to

take the outsourced tasks, they often look

for small business.

The Glass Ceiling Effect

is the unseen barrier forwomen to advance

further in a male

dominated industry.

When companies

suffer through

difficult times,

they often fire or

layoff employees.

This is also called

Downsizing


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Entrepreneur

Hi there! Im

Robbie and I

want to be an

entrepreneur.

Do you know

what

entrepreneur is?

DO not confuse

with the word

Intrapreneurs.

They are those

who create

innovation

within a bigger

or anization.

Oh really? How about

the intrapreneur? Are

they the same?

Most successful entrepreneurs are

outgoing, independent, news savvy,

ambitious, positive, and risk takers.

Of course I am! An

entrepreneur is

those who are risk

takers that begin

new businesses in

private industry.

Are there any

qualities that should

be considered?


8/23

QUALITIES OFA GOOD ENTREPRENEUR

Going into business is highly profitable. The field of business enterprise is a large enough

for people who are able to identify the needs of others for possible business opportunities;

make use of the necessary resources to deliver the needs(goods and services) when needed by

other people at a particular time and place.

ORGANIZED HARDWORKING

ENTHUSIASTIC

DECISION-MAKING

SELF-CONFIDENT RESOURCEFUL

To succeed in business you must developed good work habits such as : hardworking,

enthusiastic, and willing to learn the trade, build your own self confidence, set goals or objectives,

concentrate on what you are doing, organize yourself, take initiative and be resourceful, make wise

decisions as need arises.

A good entrepreneur is highly motivated to provide the needed goods and services of the

people in the community. He is creative and innovative. He is a good planner and set his goals clearly.

He is willing to take the responsibility for his decision.


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FRANCHISE

There are three ways to begin a business: create a startup, buy a franchise, or purchase an

existing business. Choosing the startup option, a new venture, is the most common with sixty-six

percent of all new businesses beginning as a startup. This is also the most difficult option.Purchasing an existing business reduces risks only if the background is thoroughly investigated.

A franchise is a business arrangement in which a small business (franchise) buys to sell goods or

services of the supplier (franchisor). McDonalds and subway are two very popular franchisors.

One of the best ways to evaluate a prospective franchisor is to talk to other franchises.

Advantages of choosing franchises are: getting a successful business blueprint, instant name

recognition, training, advertising programs, standardized quality, and an instant support network.

Disadvantages of franchises include upfront costs, monthly royalties, fixed suppliers, and little

independence or creativity options. There are three types of franchises:


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Franchise Type Description Example

Product franchise Right to sell trademarked

goods

Car dealerships.

Manufacturing franchise

Right to produce and

distribute manufacturers

products.

Soft drink bottling plant.

Business format franchiseRight to open a business usinga franchisors name and format

for doing business.

Fast food chains.

Regardless of the business type the entrepreneur chooses, there is a risk of failure. Lack

of management skills, experience, uncontrolled growth, and proper financing are some of the

most common reasons businesses fail.

Chaos is the fastest way to kill a successful business. How does a business get help to

continue? The textbook mentions three sources: SCORE, INCUBATORS, and the INTERNET.

Score is the service corps of retired executives, a resource partner of the SBA. These retired

business people volunteer to consult small businesses on financing, business plans, and growth.

Incubators are organizations that help small businesses through the early stages of

development. Help includes offices space, legal and accounting services, advice, support for

marketing and administration, and contracts. Some incubators specialize in particular industries

or products. Eight out of ten business helped by incubators will be successful.

Ones the business survives though initial stages of start-up, the incubator services end. The time

limit for helping a business is usually set at 18 months to five years.

The Internet contains a large amount of data for research and the opportunity to market

services globally in real-time. Newsgroups and site that specialize in the industry or business

type can be a particular useful. Two popular newsgroup site are http://www.yahoo.com and

http://www.topica.com. There are also general sites that supply information to small business

like http://www.inc.com and http://business2.com. The Wall Street Journal has a site devoted to

small business a http://www.startupjournal.com.


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The Small Business Administration (SBA) is a federal organization that provides many

resources for small business owners. The website at http://www.sba.gov contains many featuresincluding:

Answer desk

Business courses

Publications

Final assistance

Extra support for women, minorities, and veterans

Links to other resources

When a business needs external financing, there are four topics to consider: length of term,

type of financing, cost of capital, and source of financing. Financing terms can be split into two

categories: short-term financing and long-term financing. Short-term financing is capital that will

be repaid within one year. It is typically debt financing and is used to increase cash-flow and pay

creditors. Long-term financing is any financing that extends beyond one year. It is more costly

than other financing. This financing is used to buy buildings, equipment, vehicles, and other

asset. Long-term financing is also used to fund new or grow existing business.

The cost of capital is the average interest rate paid on financing. It is similar to the interest

rate you must pay when purchasing a house. It is not included in the initial price of the house, but

it is an additional expense that should be considered. There are three main factors that affect the

interest rate a particular company must pay:

Risk associated with the company-how likely is it that the company will repay?

Most common interest rate currently available- rates fluctuate with economic

environment

What type of financing is chosen


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The two types of financing are debt financing and equity financing. Debt

financing is short-term loan instrument that can be secured or unsecured. A secured loan

is backed by the companys assets or collateral. If the company cannot relay the loan, the

lender will take the collateral away from the company. Payments must be made

regardless of operating results. Assets typically secured include buildings, equipment,

and land. An unsecured loan is not backed by an asset; therefore, the lender cannot take

immediate ownership. Equity financing is offering company stock for sale. Stock is a

(usually small) percentage or share of company ownership. The first offering of this stock

is called the initial public offering (IPO). Making this initial offering is called going

public. This process is often time-consuming and costly.

CHARACTERISTICS DEBT FINANCING EQUITY FINANCING

TYPICAL TERM

Short loan Long IPO

SUBCATEGORIES

Secured orUnsecured

Preferred stock or Commonstock

BENEFITS

1. Lender doesnt gainownership interest.

2. Obligation are limitedby loan terms

3. Less costly and timeconsuming than equity

financing.

1. No specific maturitydate.

2. Company not requiredrepaying.

3. Can include manymore investors.

Private financing is obtaining capital from individual investors, family and friends,

partners or customers. There are four sources that the book emphasizes: venture capitalists, angel

investors, credit cards, and SBA assistance. Venture capitalists (VCs) raise money privately as

opposed to a public stock offering on the open market. VCs are specialists in financing new

businesses. In exchange for their health, VCs expect ownership interest in the company. Their

goal is to make a large profit on investments. In the dot com era, VCs been much more

generous with funds and required fewer guaranties than they do today. Angel investors focus on

risky startup companies looking for second round financing. Just like gamblers, angel investors

tried to play against the odds. They are willing to lend smaller sums than other investors. Angels

can provide expertise in addition to money.

Credit cards help fund one third of the companies with nineteen or fewer employees. In

the 1990s credit card companies began to focus on small businesses as a source of new income.

Credit cards are popular because of their availability and ease of use. The disadvantage is the

high interest rates associated with credit cards.


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15/23

ACTIVITY 1

Instruction:Match column A with the picture in Column B.

1. Entrepreneur a.

2. Franchise b.

3. Small Business c.

d.

4. Business plan

5. Glass Ceiling e.


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How did you find the activity? Was it interesting? I know it is difficult to remember all

the things that you have study. Dont worry. As you go along, you will gradually be familiar with

it. Try to master each lesson by reading and observing in your community. When you go to

different places try to talk with some entrepreneurs to know how they manage their businesses.

But for now try to answer the self check below to test what have you learned.

SELF CHECK

Instruction:Put a check ( / ) if the statement below is correct and if the statement is

incorrect change the word to make it right.

____1. There are two categories of small business, the lifestyle businesses and high

growth ventures.

____2. Making this initial offering is calledgoing private this process is often time

consuming and costly.

____3. Share is a (usually small) percentage orStockof company ownership.

____4. The glassceilingeffect is the unseen barrier for women to advance further in a

male- dominant industry.

____5. There are three ways to begin a business: createastartup, buya franchise, or

purchasean

ex

ist

ing b

usiness.


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You can now relax! Have fun with your favorite habit! Recall what you have learned.Then, do the posttest. I did it simply for you! See you soon!

LETS SUMMARIZE

Small business has two categories the lifestyle businesses and high-

growth ventures.

SBA (small business administration) is a good source of information

about small business.

Entrepreneurs are risk takers that begin new businesses in private

industry.

To succeed in business you must developed good work habits such as :

hardworking, enthusiastic, and willing to learn the trade, build your

own self confidence, set goals or objectives, concentrate on what you

are doing, organize yourself, take initiative and be resourceful, make

wise decisions as need arises.

There are three ways to begin a business: create a startup, buy a

franchise or purchase an existing business.A franchise is a business arrangement in which a small business

(franchisee) buys the rights to sell goods or services of the supplier

(franchisor).


18/23

POSTTEST

INSTRUCTIONS: Read and understand the questions carefully and choose the best

answer by writing the correct answer that best fit to the item on the space provided for.

____1. It is a good source of information about small business.

a. SBA c. NSA

b. NSF d. CIA

____2. It is the average interest rate paid on financing.

a. Short term financing c. Cost of capital

b. Long term financing d.Dept financing

____3. It is the risk takers that begin new businesses in private industry.

a. Intrapreneurs c. Businessman

b. Entrepreneurs d. Risk takers

____4. They are the one who create innovation within a bigger organization.

a. Entrepreneurs c. Businessman

b. Risk takers d.Intrapreneurs

____5. It is a business arrangement in which a small business buys the rights to sell

goods or services of the supplier.

a. defense, modified c. factual

b. develop, devote d. failure, feature

____6. It is also called small business or it is the other term for the small business

a. Franchisee c. Franchisor

b. Franchise d. Fast food chain

____7. It is also called supplier in the franchising world.

a. Franchisee c. Franchisor b. Franchise d. Fast food chain


19/23

____8. These are organizations that help small business through the early stages of

development.


b. Score d. Newsgroups

____9. It is the Service Corps of Retailed Executives that is a resource partner of the

SBA



____10. It contains a large amount of data for research and the opportunity to market

services globally in real time.




20/23

Assessment of your answer

Dear students, If you got 10 8 correctly, marvelous! It really shows

that you understood well all the things we have discussed.

If you got 7 6, Fantastic! You remember most of the things we have

discussed. Check those things you did not answer correctly and see why you forgot

their answer.

If youre correct answers were 5 4 that was terrific. What you haveremembered were probably the ones close to your heart, I suggest that you read the

lesson again and try to understand and practice ones more

Finally, if you have a score between 3 1, its ok. But I suggest that you

read the lesson again and see where you have forgotten some details. After reading

parts where you met some difficult, try the test again and see if you will improve.

Good luck!

Good bye now, dear students, I hope to see you when we do the next

module.


21/23

AnswerKey

Pre test / Posttest Activity Self - check

1. a 1. C 1. /2. c 2. E 2. Going - public3. b 3. B 3. Stock, Share4. d 4. D 4. /5. b 5. A 5. /6. a7. c8. a9.b10.c


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Bibliography

Books:

Feliciano R. Fajardo (1997).Management

Sampaloc, Manila: Rex Book Store, Inc.

Romulo B. Rocena, Ed. D. Et Al. Technology and Livelihood Education

for First Year

CSC Publishing Inc., Philippine Copyright 2003

Lorenzo Carriedo Jr. Et Al. Entrepreneurial Retail Operation

First Printing June, 2000, Second Printing June 2001

Internet:

http://www.yahoo.com

http://www.google.com

http://www.wikipedia.com

http://wps.prenhall.com/bp_bovee_eib_rev/0,8591,1072010-,00.html


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METHODS OF

TEACHING OFFICESYSTEM

Prepared by:

Divina, Dona Marie D.

Edited by:

Ms. Diana Divina

Submitted to:

Prof. Sheryl Morales

Documents

module - Dona Marie Divina